Aluminum prices in November will experience a “V” decline

Aluminum prices will experience a “v” trend in November. According to the Commodity Market Analysis System of Shengyi Society, as of November 30, 2024, the average price of aluminum ingots in the East China market in China was 20373.33 yuan/ton, a decrease of 2.05% compared to the market average price of 20800 yuan/ton on November 1, with a monthly fluctuation of 6.45%. The high point of the month appeared on November 8, with a daily average price of 21720 yuan/ton.

Aluminum prices weaken and decline in mid to late November

The weak downward trend in aluminum prices in mid to late November is mainly due to three factors. Firstly, after the aluminum prices rose in the first half of the year, they reached a new high for the year. However, the actual demand from downstream terminals was lower than expected, which led to resistance to high priced raw materials and intensified competition in the upstream and downstream of the industrial chain; Secondly, due to the cancellation of export tax rebates for downstream aluminum products, there is an expectation of weakened export demand in the short term. At the same time, there is a strong expectation of tax increases in the United States, which suppresses prices; The third is the main driving force behind the upward trend of aluminum ingots, and the expectation of sustained cost increases is weakening.

Expected production reduction after cost increase

Overseas, Rusal announced that it will reduce production by more than 6% (about 250000 tons) to cope with high alumina prices and rising macroeconomic risks.

Domestically, as the spot price of alumina continues to rise at a high level, the average cost of aluminum ingots in the country has risen to around 21100 yuan/ton, and over 60% of the country’s aluminum ingot production capacity has suffered losses. It cannot be ruled out that production capacity reduction and operation may occur due to the low degree of industrial chain integration.

List of Domestic Inventory Data for Aluminum Ingots

In November, the total inventory of domestic aluminum ingots decreased slightly. As of November 28th, the inventory of mainstream electrolytic aluminum plants in China was 64000 tons, a slight increase of 8000 tons from the inventory of 56000 tons in mainstream electrolytic aluminum plants on October 31st; The social inventory of electrolytic aluminum in the mainstream domestic market is 553000 tons, which is 57000 tons lower than the 610000 tons in the mainstream domestic market on October 31st.

The continuous depletion of aluminum ingot spot inventory is mainly due to two factors. Firstly, after the supply side reform of domestic electrolytic aluminum, the production capacity is gradually approaching the ceiling, and the supply side increment is limited; The second reason is that the integration level of electrolytic aluminum enterprises has been improved. In order to reduce energy consumption and save ingot costs, the on-site conversion rate of aluminum water is increasing, resulting in a decreasing amount of ingots year by year. The aluminum to water ratio will operate within the range of 63.6-73.8% in 2024, with an average of 71.1%, an increase of 5.3% compared to the same period last year, which is 67.5%.

Based on the recent inventory circulation and supply situation, railway shipping in Xinjiang has continued to improve, with a significant increase in arrivals from mainstream consumer destinations.

Aluminum prices are expected to remain weak in December

Due to the implementation of the aluminum export tax rebate policy on December 1st, the frequency of overseas buyers’ inquiries and the pace of rushing for exports have continued to accelerate recently. In late November, the downstream demand for aluminum ingots was still strong, and the off-season was not weak. In December, with the slowdown of downstream export pace, there may be negative feedback on the aluminum ingot market, and the expectation of a off-season may come. It is expected that aluminum prices will mainly operate weakly in December. The main risk variables are the sustainability of cost support (whether alumina prices continue to remain high) and changes in aluminum ingot production capacity.

According to the Commodity Market Analysis System of Shengyi Society, the domestic polyester staple fiber market has experienced a slight decline since mid November. As of November 28th, the average price of 1.4D * 38mm in mainstream factories in Jiangsu and Zhejiang was 7176 yuan/ton, a decrease of 0.92% from November 12th. Cost fluctuations have weakened, providing insufficient support for the cost of polyester staple fibers. The company has sufficient supply of circulating goods, resulting in relatively weak downstream demand and weakened supply and demand, leading to a fluctuating decline in staple fiber prices.

In the international crude oil market, with the easing of geopolitical issues in the Middle East and a slight decline in crude oil prices, the support for PTA costs has slowed down. As of November 26th, the settlement price of the main contract for WTI crude oil futures in the United States was $68.77 per barrel, and the settlement price of the main contract for Brent crude oil futures was $72.81 per barrel.

Since November, there has been an increase in domestic PTA supply, with over 10 million tons of PTA plants being restarted one after another, and the current industry operating rate is close to 90%. The new PTA production capacity of 2.7 million tons in the East China region is also about to be put into operation, and the PTA supply is still abundant, which is bearish on spot prices. According to the Commodity Market Analysis System of Shengyi Society, as of November 28th, the average market price in East China was 4741 yuan/ton, a decrease of 3.24% from the beginning of the month.

The overall performance of the terminal textile industry is poor, and the industry demand is still in the traditional off-season. Downstream yarn mills maintain their demand for essential purchases. In terms of orders, domestic autumn and winter orders are coming to an end, and the enthusiasm for raw material stocking is insufficient. The demand for foreign trade orders still exists, but it has narrowed compared to the same period last year.

Business analysts believe that the cost side is weakening and adjusting, downstream purchases continue to be cautious, and market fundamentals lack upward drivers. Therefore, the price of polyester staple fibers may continue to adjust downward.

Since November, there has been an increase in domestic supply, with over 10 million tons of PTA plants being restarted one after another, and the current industry operating rate is close to 90%. The new PTA production capacity of 2.7 million tons in the East China region is also about to be put into operation, and the PTA supply is still abundant, which is bearish on spot prices.

According to the Commodity Market Analysis System of Shengyi Society, as of November 27th, the average market price in East China was 4783 yuan/ton, a decrease of 2.39% from the beginning of the month.

The easing of geopolitical issues in the Middle East and the slight decline in crude oil prices have slowed down the support for PTA costs. As of November 26th, the settlement price of the main contract for WTI crude oil futures in the United States was $68.77 per barrel, and the settlement price of the main contract for Brent crude oil futures was $72.81 per barrel.

The downstream polyester end maintains high load, while the overall performance of the terminal textile is poor. Domestic autumn and winter orders are coming to an end, and the enthusiasm for raw material stocking is insufficient. The demand for foreign trade orders still exists, but it has narrowed compared to the same period last year.

Therefore, overall, analysts from Shengyi Society believe that the PTA market lacks upward momentum, and the market may experience weak fluctuations and adjustments.

1、 Price trend

According to the commodity analysis system of Shengyi Society, as of November 26th, the average market price of soda ash was 1556 yuan/ton. Compared with the soda ash price of 1546 yuan/ton on November 20th, the price has increased by 10 yuan/ton, an increase of 0.65%.

2、 Market analysis

Recently, the soda ash market has seen a slight increase. On the supply side, there are equipment shutdowns and maintenance on site, resulting in a slight decrease in the utilization rate of soda ash production capacity. In some areas, prices have slightly increased, but downstream demand is average, and the market trading atmosphere is weak, which provides insufficient support for soda ash. The price increase has been suppressed, and the overall soda ash market is stable with small fluctuations.

As of November 26th, the reference price for the soda ash market in East China is around 1450-1600 yuan/ton for light soda ash, with an increase of 30 yuan/ton within the week; The reference price for the soda ash market in Central China is around 1380-1550 yuan/ton for light soda ash, with an increase of 10 yuan/ton within the week.

According to the commodity analysis system of Shengyi Society, the downstream glass market is weak and declining. From November 20th to 26th, glass prices fell from 16.65 yuan/square meter to 16.40 yuan/square meter, a decrease of 1.50%. Some production lines in the glass market have resumed production, with an increase in operating rates and an increase in on-site inventory supply. Downstream follow-up is average, with a focus on entering the market according to demand. Overall, manufacturers have limited shipments, and the on-site mentality is bearish, resulting in a continued decline in glass prices.

Future forecast: Currently, there is little change in domestic soda ash production capacity, and the inventory of spot soda ash plants is still high. There is still pressure on enterprises to ship, and the downstream glass market continues to be weak, providing insufficient support for the soda ash market demand and limited market transactions. It is expected that soda ash will operate stably in the short term, and specific attention will be paid to downstream demand follow-up.

Last week (November 18-24, 2024), the upstream main raw material market remained stable, with strong support from the cost side and low inventory levels in the market. Positive support from the supply side still exists, while downstream yarn factories have limited new orders and mostly purchase goods according to demand. Manufacturers mainly deliver orders, and with mixed news on the market, the price fluctuations in the adhesive short fiber market are not significant, and the market atmosphere is stable.

According to the Commodity Market Analysis System of Shengyi Society, as of November 24th, the domestic factory price of 1.2D * 38mm adhesive short fiber is 13820 yuan/ton, and the price continues to remain stable.

The focus of the raw material market remains stable, with good cost support

Last week (November 18-24, 2024), the market price of upstream main raw material dissolved pulp remained firm. As of November 24, the price of domestic dissolved pulp was around 7900 yuan/ton, the price of outer broad-leaved pulp was around 970 US dollars/ton, and the price of coniferous pulp was around 1070 US dollars/ton. The price of auxiliary materials in the market is narrowly upward. As of now, the average price of 32% liquid caustic soda in China’s market is 1046.36 yuan/ton, which is roughly the same as the beginning of the month; The average market price of 98% acid is 359 yuan/ton, an increase of 1.13% compared to the beginning of the month. Overall, the upstream main raw material dissolution slurry market and auxiliary material liquid alkali market are consolidating at a high level, the sulfuric acid market is trending upwards, the price center of the raw material market has shifted upward, and the cost support of adhesive short fibers is good.

No inventory pressure

Last week (November 18-24, 2024), there was no significant fluctuation in the operating load of the adhesive short fiber market equipment, and the industry operating rate remained at around 85.8%. With orders from various manufacturers being delivered one after another, inventory levels continued to decline, and some models were under tight delivery. The supply side provided some upward momentum for the market.

Downstream demand

The downstream cotton yarn market mainly executes preliminary orders and operates with price consolidation. The demand in the terminal market has not improved significantly, and the downstream yarn market production capacity continues to increase. Although the demand for adhesive short fibers has increased, the shipment situation of yarn factories is not ideal, and prices lack upward momentum, making it difficult to provide certain favorable support for the adhesive short fiber market.

Future forecast

The upstream raw material market prices may remain firm and stable, with limited on-site supply and relatively stable cost support, resulting in low on-site inventory. The peak demand season in the terminal market has ended, and downstream yarn factories are facing a shortage of new orders, resulting in a low enthusiasm for raw material procurement. Yarn companies may focus on first-time purchases, so it is expected that the driving force for the adhesive short fiber market in the later stage will be average from the demand side. Business analysts predict that the domestic adhesive short fiber market will experience a slight consolidation in the short term, with prices expected to be between 13700-14000 yuan/ton.